The advent of mobile money services in Rwanda a few years back was touted as a liberating phenomenon by some experts because it enables people send and receive money outside the banking system.
With the growth of the services over the past two years, some people started looking at mobile money services as a threat to the banking sector.
This belief was mainly driven by the fact that far more people were registering and transacting using the service compared to Rwandans who were opening bank accounts.
Some people started to look at the telecom sector as a competitor to the financial industry, especially in payments for services. Presently, one can buy life insurance, pay school fees and utility bills, among others, using mobile money.
The expansion of services offered by telecoms under the mobile money services over the past three years has seen the number of mobile accounts rise dramatically from 2.4 million in 2011 to 7.7 million in 2015.
On the other hand, people opening bank accounts increased marginally to about one million between 2011 and 2015. Experts say the growth of mobile money has compelled banks to rethink their strategies to remain relevant in the increasingly competitive sector.
What telecom firms say
According to Steve Gasana from Airtel Rwanda telecoms and banks work closely, which allows their customers to save the money they have in their mobile wallets in bank accounts. Gasana says mobile money wallets give customers easy accessibility and convenience, which attracts more subscribers compared to banks.
This he says has gotten banks worried and forced them to forge partnerships with the telecom sector, taking advantage of complementarity of the two sectors.
He says telecoms still have an edge over banks because they have deeper reach, serving segments of society that have been abandoned by banks.
“Though we compete with banks in some areas, like payments of utility bills, and money transfer, there are many other areas where we complement each other and hence partnerships.
Kenneth Agutamba, the the Bank of Kigali market and public relations manager, says more people are opening up with mobile accounts, “and this provides us an opportunity as a forward-looking bank”.
Agutamba says the bank has a new service called “Push-Pull” which links customers bank accounts and their mobile money wallets.
“With BK “Push-Pull”, a customer can move money from their mobile money wallet and save it on their bank account. This possible across on all the three telecom networks in Rwanda,” he adds.
“Therefore, in a way, a mobile money wallet can be a temporary form of putting money aside before it can be saved on bank account that is more secure,” he says.
He also argues that saving with a bank gives one access to more credit benefits, such as loans and interest on savings.
“In more volatile countries, you could be forced to reveal your mobile money wallet since you have the phone with you. But with money in the bank, this is not as easy. Also, with technology, it is now possible to bank over the phone,” he adds.
Agutamba says Bank of Kigali has partnered with telecoms to offer services like BK Mobiserve, which enables one to access their account on their mobile phone, “giving them the convenience of banking wherever they wish”. All these initiatives, experts say, are aimed at staying relevant in the market.
According to Teta Mpyisi, the senior manager, brand and sponsorship at MTN Rwanda, the two sectors support each other to deepen their reach and serve customers better and conveniently. She adds that telecoms have deeper reach, which financial services sector players have capitalised on to expand their services through partnerships with telecoms.
She says the firm has partnered with different banks, such as Bank of Kigali, KCB Bank, Equity Bank, and I&M Bank to ensure their customers get extra services offered by banks.
“This is to allow customers access bank services conveniently through MTN mobile money. With mobile money, one can link their bank accounts with mobile money wallet on the “Push-Pull” service,” she says.
The firm boasts of over 3.7 million mobile money subscribers.
According to Doreen Mukami, a corporate communications expert at National Bank of Rwanda, banking services is beyond payment services.
Mukami says banks and telecoms complement each other in the provision of mobile financial services.
“Such will be enhanced with the interoperability. Telecoms have been able to offer convenience, accessibility to low income and rural segment of the population as opposed to the traditional banking system,” she says.
“We are working with other stakeholders, including microfinance institutions, and SACCOs to build an inclusive platform for the industry,” he says.
She notes that mobile money serves both the banked and unbanked.
He believes banks will need to do more to attract clients, including reducing the cost related to account opening and maintenance, and allowing access to their accounts with greater convenience. Remittances services have been opened to non-banks to allow competition and reduce the cost of services, he adds.
Mobile money subscribers on the increase
Rwandans interviewed by this newspaper say mobile money offers them numerous benefits compared having a bank account. For many, mobile wallets are handy especially in times of emergency.
Stephanie Cyizere, who owns a hardware shop at Gisementi, says he was forced to open a mobile account “as it is easy to access, at any time” and serves the same purpose as a bank account.
He says he is not likely to apply for a bank loan, arguing that bank loans are costly. “I am always disciplined when it comes to spending and saving using my mobile account. I withdraw after I have accumulated enough to restock,” explains Cyizere.
According to Joseph Munyaneza, a financial analyst at Rwanda Stock Exchange, the increase in the number of people with mobile account is due to the substitute services they offer.
“Mobile money recorded a high performance basically because of the big reach to the users compared to other financial services providers,” he says.
He adds that telecoms offer affordable cost of services, consideration of any size of capital and variety of additional services such as paying electricity bills and school fees.
Above, all, the mobile money services are easily accessible compared to bank services thanks to huge agency network of mobile outreach.